Coyote Blog

Gary Becker via Ilya Somin:

The toughest competition for basketball and football players occurs at the Division I level. These sports have both large attendances at games-sometimes, more than 100,000 persons attend college football games– and widespread television coverage.... Absent the rules enforced by the NCAA, the competition for players would stiffen, especially for the big stars...

To avoid that outcome, the NCAA sharply limits the number of athletic scholarships, and even more importantly, limits the size of the scholarships that schools can offer the best players....

It is impossible for an outsider to look at these rules without concluding that their main aim is to make the NCAA an effective cartel that severely constrains competition among schools for players. The NCAA defends these rules by claiming that their main purpose is to prevent exploitation of student-athletes, to provide a more equitable system of recruitment that enables many colleges to maintain football and basketball programs and actively search for athletes, and to insure that the athletes become students as well as athletes.

Unfortunately for the NCAA, the facts are blatantly inconsistent with these defenses....

I expressed many of the same thoughts in this article at Forbes.  In addition to making the same points as Becker, I slammed on the whole concept of the "amateur athlete" as an outdated holdover from the British aristocracy and their disdain for commerce:

University presidents with lucrative athletic programs will do about anything to distract attention from just how much money their Universities are making off of essentially unpaid labor.  Their favorite mantra is to claim they are holding up an ideal of “amateurism.”

The whole amateur ideal is just a tired holdover from the British aristocracy, the blue-blooded notion that a true “gentleman” did not actually work for a living but sponged off the locals while perfecting his golf or polo game.  These ideas permeated British universities like Oxford and Cambridge, which in turn served as the model for many US colleges.  Even the Olympics, though,  finally gave up the stupid distinction of amateur status years ago, allowing the best athletes to compete whether or not someone has ever paid them for anything.

In fact, were we to try to impose this same notion of “amateurism” in any other part of society, or even any other corner of university life, it would be considered absurd.  Do we make an amateur distinction with engineers?  Economists?  Poets?

When Brooke Shields was at Princeton, she still was able to perform in the “amateur” school shows despite the fact she had already been paid as an actress.   Engineering students are still allowed to study engineering at a university even if a private party pays them for their labor over the summer.  Students don’t get kicked out of the school glee club just because they make money at night singing in a bar.  The student council president isn’t going to be suspended by her school if she makes money over the summer at a policy think tank.

In fact, of all the activities on campus, the only one a student cannot pursue while simultaneously getting paid is athletics.  I am sure that it is just coincidence that athletics happens to be, by orders of magnitude, far more lucrative to universities than all the other student activities combined.

The importance of government largess to sports, including publicly-funded stadiums, has been a frequent topic on this blog.  Recently, the CEO of the Fiesta Bowl John Junker was fired for a number of alleged violations related to campaign contributions and favors for politicians.  This story is virtually inevitable.

The Fiesta Bowl benefits enormously from being one of the four BCS bowl games.  In fact, the difference economically between being one of the four BCS bowl games and being one of the numerous other bowls is roughly the difference between the United States and, say, Peru.   To give one a sense, the prize money for winning a BCS bowl is about $18 million.  The prize money for all other bowl games varies from $325,000 to, at most, $4.25 million.

But the Fiesta Bowl would almost certainly not be one of the four BCS bowls were it not for the city of Glendale building a half billion dollar stadium to be shared by our NFL franchise and the Fiesta Bowl.  It would almost be shocking if a few tens of thousands of dollars were not directed to politicians given the stakes on the table.  And it should be no surprise that politicians in Glendale received many of the payments.

Postscript:  Junker's attorney's comments are telling.  This was all about doing what it takes to make the Fiesta Bowl a big player.   And I can tell you, from all the grief I have gotten for defending a Constitutional principle at the expense of holding on to a sports franchise, there is a strong public lobby for the ends justifying the means when sports are involved.  Anyway, here is the quote:

While Junker declined SI.com's request to be interviewed for this story, his lawyer, Stephen M. Dichter, could not resist issuing an e-mailed reminder that it was his client "who took the Fiesta Bowl from a postseason game created so [that] Frank Kush's ASU Sun Devils would have a game in which they could be showcased while they and the rest of the WAC were completely ignored by the national media to its present position as one of the four pillars of the Bowl Championship Series."

Here is the top 10 in the bracket challenge after the first week.  Sadly, both of my brackets are in the bottom half.  Apparently, it is statistically impossible for me to do better than 15th place  (thank God for technology so that hope is dashed and I can no longer fool myself about my future chances).  Even worse, my son made the top 10.  More results here.

It is good to see the President take time out of his busy schedule to submit a bracket in our competition.

Over the last few weeks I have been following the story of the city of Glendale, AZ, in order to protect a previous $200 million public investment in our hockey team, proposing to issue another $100 million bond issue to help subsidize the purchase of the hockey team out of bankruptcy.

The real furor began when the Goldwater Institute, a local libertarian-conservative think tank, said they were considering suing over the bond issue because it violates the gift clause of the Arizona Constitution, which basically bans municipal governments from providing direct subsidies or lending their credit to private institutions.  The gift clause has been frequently breached in the past (politicians do love to subsidize high-profile businesses), but of late Goldwater has successfully challenged several public expenditures under the gift clause.

I won't rehash the whole argument, but I found this bit from Senator McCain interesting

He called on the Goldwater Institute, a Valley watchdog that intends to sue to block the deal, to sit down and negotiate to keep the team

The buyer Matthew Hulsizer and his staff have taken this position throughout the deal -- they have lamented that they are more than willing to "negotiate" with Goldwater, and they are frustrated Goldwater won't come to the table with them.

This claim seems bizarre to me. If Goldwater thinks the deal is un-Constitutional, what is to "negotiate?" I don't know Hulsizer or anything about him, but it strikes me that he is working from a Chicago paradigm, and is treating Goldwater as if it were a community organizer. In Chicago, community organizers try to use third parties to protest various deals, like the opening of a Wal-Mart or a new bank. These third-parties are nominally protesting on ideological grounds, but in fact they are merely trying to throw a spanner in the works in order to get a pay off from the deal makers, almost like a protection racket. The payoff might be money or some concession for the group (e.g. guarantee of X% jobs for this group in project, $X in loans earmarked for group, etc).

Everything I have seen tells me Hulsizer is approaching Goldwater in this paradigm.  Even going out and rounding up the most prominent politician in the state (McCain) to put pressure on Goldwater is part of this same Chicago paradigm.

Here by the way  is what Hulsizer is apparently offering

As one part of the deal, Glendale would sell bonds to pay Hulsizer $100 million, which the Chicago investor would use to purchase the team for $210 million from the National Hockey League.

Hulsizer said he notified Goldwater he would guarantee the team will pay Glendale at least $100 million during its lease on the city's Jobing.com Arena through $75 million in team rent and fees and by covering $25 million in team losses that the city promised to pay the NHL this season, which is included in the hockey team's purchase price.

"We need to move forward now," he said. "I expect that Goldwater and other people who have come out against this deal will hopefully recognize the benefits of it and will now use all of that energy and tenacity and aggressiveness to go out and help us sell these bonds and make hockey work in the desert forever."

Hulsizer said Goldwater had not yet responded to him.

By the way, I hesitate to trust the Arizona Republic to report such deal terms correctly, but if what is reported above is correct, the offer appears to be non-sense

1. What kind of guarantee is he offering?  Is it a guarantee by the corporate vehicle buying the team, because if it is, this is worthless.   The last team ownership group promised to pay the lease for 30 years -- what does that mean once they went bankrupt?  I am sure Borders Books promised to pay a lot of real estate owners money for leases, and many of them are going to end up empty-handed in the bankruptcy.  If this is a personal guarantee, that is a nice step forward, though not enough because....
2. The $75 million in rent is largely irrelevant to the new bond issue -- these rents support the old $200 million bond issue.  What they are saying is "issue a new $100 million bond issue for us and we will guarantee you can make 40% of the payments for the old bond issue."   So?  When Balsillie wanted to move the team, he didn't ask for an additional bond issue and agreed to pay off $50 million of the old one as an exit fee.
3. At the end of the day, if the $100 million is not a subsidy, not at risk, and fully backed by guaranteed cash flows, then Hulsizer should go out and get a $100 million private loan.  Period.

Unfortunately, this might be enough to get the deal through the courts.  Glendale will argue that for the $100 million, they will get $100 million paid against their existing bond issues that would not otherwise be paid if the team folds or leaves town.  This may fly with the courts, unfortunately, but it still sucks for taxpayers.   At the end of the day, nothing about this offer makes the $100 million bond issue any safer.   If the team goes bankrupt, it is lost.  That is an equity risk the city is taking with taxpayer funds, and equity risk for which we are getting no equity.  See here for full discussion of the risks and problems.

Postscript: The following is pure speculation, but I think it is close to correct.  The team is worth about $110 million at best (remember, it has never made money in AZ).  Forbes values it at $117 million but several similar franchises have sold for under $100 million lately.   The reason it is selling for $210 million is that the NHL, which bought it out of bankruptcy, guaranteed its other owners the league would not lose a penny on the team.   But the team has been racking up losses, and the accumulated cost to the NHL is now $210 million.  The NHL is insisting on a price that is $100 million north of where it should be.  In effect, the taxpayers of Glendale are bailing out the NHL for this crazy promise to its owners.

I can just see the negotiation.  Hulsizer, who by every evidence is a savvy financial guy, is not going to pay $210 million for an asset worth $110 million.  Glendale has way too many chips on the table to fold now, so it rides in and says it will contribute the $100 million difference.  In fact, the best evidence this is a subsidy is the difference between the purchase price and any reasonable team value.  Someone has to make up the ridiculous gap between the NHL asking price and reality, and Hulsizer is too smart to do it.   I have been calling this a subsidy of Hulsizer, but in fact this is really a subsidy of the NHL.   The NHL has Glendale by the short hairs, because Glendale knows (from the Balsillie offer, among others) that the only way the NHL can get a $210 million price is from a buyer who wants to move the team.

This, by the way, is EXACTLY the reason I opposed the original stadium funding deal.  Once they built the stadium, and then went further and lured businesses to develop around it, they were wide open to blackmail of this sort.

The problem with doubling down at this point is that the team has never made money and has no real public plan for doing so.  I have talked to NHL executives and none of them see how the turnaround is possible.  So how many years will it be before the new owners tire of their plaything and throw the team back into bankruptcy, so that Glendale will be in the exact same spot except $300 million, rather than $200 million, in debt.

I took my blog post from earlier this week and expanded it to a full-blown column on the NCAA and its efforts to never, ever let its athletes make a dime from their skills.  An excerpt:

University presidents with lucrative athletic programs will do about anything to distract attention from just how much money their Universities are making off of essentially unpaid labor.  Their favorite mantra is to claim they are holding up an ideal of “amateurism.”

The whole amateur ideal is just a tired holdover from the British aristocracy, the blue-blooded notion that a true “gentleman” did not actually work for a living but sponged off the local gentry while perfecting his golf or polo game.  These ideas permeated British universities like Oxford and Cambridge, which in turn served as the model for many US colleges.  Even the Olympics, though,  finally gave up the stupid distinction of amateur status years ago, allowing the best athletes to compete whether or not someone has ever paid them for anything.

In fact, were we to try to impose this same notion of “amateurism” in any other part of society, or even any other corner of University life, it would be considered absurd.  Do we make an amateur distinction with engineers?  Economists?  Poets?

When Brooke Shields was at Princeton, she still was able to perform in the “amateur” school shows despite the fact she had already been paid as an actress.   Engineering students are still allowed to study engineering at a University even if a private party pays them for their labor over the summer.  Students don’t get kicked out of the school glee club just because they make money at night singing in a bar.  The student council president isn’t going to be suspended by her school if she makes money over the summer at a policy think tank.

In fact, of all the activities on campus, the only one a student cannot pursue while simultaneously getting paid is athletics.  I am sure that it is just coincidence that athletics happens to be, by orders of magnitude, far more lucrative to universities than all the other student activities combined.

Princeton continues its designated role in the universe of scaring the crap out of high NCAA tournament seeds, but fell just short when Kentucky took the lead with 2 seconds left.   I engaged in emotional diversification by picking against them in my brackets, so I would have both joy and pain either way.

We have 122 backets entered in our competition this year.  Here is the pick report by game

To join, go to http://www.pickhoops.com/CoyoteBlog and sign up, then enter your bracket.

To join, go to http://www.pickhoops.com/CoyoteBlog and sign up, then enter your bracket.  This year, you may enter two different brackets if you wish.

The deadline is Thursday at noon, Eastern time.

Name a multi-billion dollar industry where all the competitors in the industry have formed a single cartel.  This cartel performs many functions, but one of its highest profile functions is to aggressively punish any member who pays its employees more than a cartel-enforced maximum.

Believe it or not, there is such an industry in the US... college sports.  The cartel is the NCAA, and whenever the NCAA makes the news, it usually is with an enforcement action punishing a school for allowing any of its athletes to make more than the agreed maximum salary, which is generally defined as free tuition.  As folks are learning at Ohio State, even trading your autograph for a free tattoo is not too small a transaction to attract ruthless NCAA retaliation.

This ESPN page (via Phil Miller) shows 2010 athletic revenue by school.  Take the top school on the list, the University of Texas.  In 2010 its athletic program brought in over $143 million in revenues.  It paid its workers (athletes) who helped generate this revenue $8.4 million (in the form of tuition), or 5.9% of revenues.  Its hard to decide whether this is high or low, though this percentage of labor for a service business seems low.  Looking for an analog, we can turn to the NFL, which is currently negotiating a revenue split with players.  The issue is still under negotiation, but for years players have been guaranteed over 50% of total revenues.

Even the Olympics finally gave up its stupid distinction of amateur status, allowing the best athletes to compete whether or not someone has ever paid them for anything.  This only makes sense - we don't have amateur engineers who work for free before they give up their amateur status for the professional ranks.  I can still continue to earn my degree at college in programming while being paid by outside companies to do programming.   I can still participate in the school glee club if I make money in a bar singing at nights.  I can still be student council president if I make money in the summers at a policy think tank.  Of all the activities on campus, the only one I cannot pursue if someone is willing to pay me for the same skill is athletics.

Only the NCAA holds out with this dumb amateur distinction, and the purpose is obvious -- it provides cover for what otherwise would be rightly treated as worker exploitation.  And they get away with it because most of the members of this cartel are actually state governments, who are really good at exempting themselves from the same standards the rest of us have to follow.

My column is up this week at Forbes, and discusses the role of taxpayer money in professional sports.

A  critical battle is underway challenging the very heart of the professional sports economics model — and it is not the NFL labor negotiations.  The unlikely fight is between a struggling league (the NHL), a suburb with delusions of grandeur (Glendale, Arizona), and a small, regional think tank (the Goldwater Institute).   At stake is an important source of value for nearly every professional sports team:  taxpayer subsidies....

Consider the Arizona Cardinals new football stadium in Glendale, for example.  In part due to the promise of a Superbowl bid, the local taxpayers paid $346 million of the total $455 million cost of the facility — a building that will be used just three hours a day on ten days a year for its primary purpose.  By contrast, in 2010 Forbes valued the Arizona Cardinals at $919 million, meaning well over a third of the franchise’s value accrues from the public subsidy of its retractable roof palace.  It can be argued that much of the increase in player salaries and team owner wealth in the NFL over the last twenty years has come at the expense of taxpayers.

If anything, this example from the NFL understates the importance of public funding of stadiums.  Why?  Because of all the major sports leagues, the NFL gets the lowest percentage of its total revenues from its stadiums.  Leagues like the NBA, and in particular the NHL, are far more dependent on stadium revenue for their well-being.

Let’s return to precocious Glendale.  In 2003, the city agreed to publicly fund $180 million of the $220 million cost of building a new arena for the Phoenix Coyotes hockey team.  Whereas Glendale’s subsidy of the Cardinals represented about a third of that franchise’s value, their $180 million subsidy of the Coyotes represents over 130% of the current $134 million value of the team.  Stuck in Arizona and losing as much as $40 million a year, the team is literally worthless without ongoing public subsidies.

The column goes on to discuss yet another bond issue proposed by Glendale to subsidize these teams.

Several days ago, I wrote how our local paper, the Arizona Republic, was engaging in a coordinated campaign to get the city of Glendale to subsidize the private purchase of our professional hockey team with a $200 million bond issue.  The logic of this is mainly to save the previous $180 million bond issue the city unwisely issued several years ago to build an arena for this same hockey time as well as the sweetheart commercial real estate deals it has cut adjacent to the stadium.   All in all, the city proposes to spend a cumulative $380 million of public money to hold on to an asset valued by third parties at $ 116 million.  And through all of this spending, taxpayers will end up with not a dime of equity in this asset.

At the time, I thought the campaign had been relentless, going on day after day with both editorials and news articles making cases to subsidize the team, and hammering the Goldwater Institute for actually questioning the legality of transaction.  I mean God forbid anyone would actually interpret the Arizona Constitution "gift clause" that says governments in the state cannot give money to private businesses as potentially barring Glendale from giving money to a private investor so he can buy the hockey team.

But when I called the campaign relentless, little did I know it would continue day after day through the rest of the week.  Every day we get a new article that is basically an editorial in disguise, with the opposing position, if included, down around paragraph 25.   Today's is just a masterpiece of such yellow journalism, which includes no opposing viewpoint at all, and includes this classic gem that is almost a caricature of itself:

Rick Myers and his wife have worked as part-time ticket-takers since 2004, the year after Jobing.com Arena opened and they visited for the first time.

"This arena is not brick and mortar, ice and air-conditioning. This arena is a family," he said.

Craig Van Kessel, a disabled military veteran, agreed.

He said six months after getting a job with the team, when he had major surgery, his co-workers called, sent cards and offered help. The team also donates prizes each year for a Western Amputee Golf Association tournament that Kessel helps organize.

If the team leaves, he said, it affects "us little people."

John Minor, a guest services employee, said he counts friendships among the fans he meets at the arena, while Kyle Olson, director of arena events, said he's taught his toddler to howl like a coyote.

Can I barf now?  Seriously, if you were doing a caricature of bad anecdotal arguments for a typical concentrated-benefits-diffuse-costs government program, could you do any better than this?  We are talking about $200 freaking million dollars here.

Nowhere in any of its editorials or news articles acting as thinly veiled editorials does the AZ Republic reveal that it is an enormously interested party to the transaction.  The Sports Section sells papers, and the presence of an additional major league franchise adds a hard to measure but most definite contribution to the paper's bottom line.

Postscript: The key issue that spurred this is that the city's bond issue is facing higher than expected interest costs.  The city and the AZ Republic are trying to lay the blame on this on Goldwater for stirring up bad karma.  But in fact there are at least six factors for why bond interest rates might be higher:

• The major bond ratings agencies recently put the city of Glendale on a credit watch list
• Sales tax revenues that pay for the bonds are way down in AZ and Glendale
• The city is investing $200 million in a $116 million dollar asset without getting any equity
• The city has a history of failed bond issues, as evidenced by the previous $180 bond issue they are trying to bail out with this one
• There is a general sense of wariness nationwide in government finances being overdrawn that may be spilling over into the bond market
• A local think tank has raised legal questions about the deal — legal questions that turned out to be correct in a parallel case.

Incredibly, our paper has spend over a week harping on just one of these, which to my mind seems the most trivial.

Postscript #2: And by the way, this team is in bankruptcy.  Where is the plan for how that will be avoided in the future?  Won't we be in the same spot five years from now, just with twice as much bond debt?

I have never really liked to wallow much in the accusation and counter-accusations of media bias.  But I am coming around to the hypothesis that the media is neither liberal or conservative but has a big government bias.  Recently, as in this article, the Arizona Republic (our daily paper) has been going after the Goldwater Institute for opposing what amounts to a $200 million subsidy to a buyer of our hockey team.

The short story is that after the city of Glendale blew a bunch of money for a hockey stadium in the desert, it turns out hockey is not very popular here (surprise).  So the team went bankrupt, and threatened to move.  To keep it from moving, the city of Glendale wants to throw more good money after bad and subsidize the new buyer.   Goldwater is challenging the subsidy as illegal under AZ law.

As I noted in the previous article, third parties value the Coyotes at $117 million.  So with this new bond issue, they will have run up $380 million in debt to keep a $117 million asset in town.  Further, they will have basically paid the entire purchase price of the team (and more) without getting a drop of equity in return.  All they get is the right to charge for parking around the arena, which is currently free.  This at first makes some sense (though the value of the concession is never mentioned) but in fact it is ludicrous as well.  The entire reason for the subsidy, supposedly, is to protect the mall/apartment/office complex around the stadium that the city cut sweetheart deals with developers to make happen.  So now they are going to charge for parking -- what is going to happen to all those businesses they supposedly are doing this for when their customer's parking is not longer free?

Anyway, the Republic editorialized against Goldwater on Sunday (in an editorial titled "Back off, Goldwater Institute") saying that they were hurting taxpayers because if the new bond issue and team sale fails, then there won't be any revenue to pay the old bond issue.  Its hard to figure how this is any different from doubling down at the roulette table in hopes of making back one's past losses.  And, Goldwater opposed the first bond issue too.

Now, the Republic has editorialized again, this time in a nominally news article.  They argue that by pointing out the potential illegality of the subsidy, Goldwater is messing up their bond interest rates.  I kid you not:

As Glendale prepares to sell bonds to finance its Phoenix Coyotes deal, the interest rates the city obtains make a big difference in how much debt Glendale would take on.

Team buyer Matthew Hulsizer says investors are demanding high interest rates due to nervousness among bond buyers about a potential Goldwater Institute lawsuit over whether the city is illegally subsidizing a private business. Glendale maintains it's on firm legal ground.

This is exactly the line the paper took in its Sunday editorial.  Now they are giving an interested party the ability repeat it in a supposed news article.  The author deliberately puts Goldwater on the spot and in the center of blame

Late Monday, Hulsizer questioned whether the Goldwater Institute wanted the team to stay.

"If they do indeed want the team to stay, then wouldn't they want the city to be able to complete financing at the best possible rate?" he said in a statement to The Arizona Republic.

He asked, if the Coyotes left Glendale, what Goldwater's plan was for the city to pay off its construction debt on the arena and for businesses nearby to survive without hockey customers. The city spent $180 million to open the arena in 2003.

Why in heaven's name is it Goldwater's problem that an earlier bond issue they actively opposed as a bad idea might turn out to, you know, have been a bad idea?  The article goes on and on this way, quoting other people of the same point of view. Goldwater doesn't get a quote until paragraph 24 or so, where Darcey Olson who heads the Institute says

She said Glendale has "unlimited options" to avoid a Goldwater lawsuit. "For instance, Hulsizer could get a private loan to buy this team like most businesses do," she said. "They finance their investments not on the backs of taxpayers but take the risk privately where it belongs."

The evidence of the article that Goldwater is shaking the very pillars of Wall Street is that the city expected one set of interest rates, but the market was giving them higher rates

Glendale officials in December hoped for a roughly 6 percent interest rate.

Todd Curtis, portfolio manager for Aquila Tax-Free Trust of Arizona, said he expected to see a 5 to 5.5 percent interest rate after Moody's Investors Service in mid-February gave the Coyotes bond sale a fairly high rating.

More than a week ago, Curtis was hearing of proposed rates around 7 percent.

Of course, they present no evidence as to why this might be. We are left to assume it is because Goldwater is somehow creating unfair bad vibes. Except then we get this oh-by-the-way near the end of the article:

Moody's and Standard & Poor's raised worries in February about the city's debt levels. As a result, Moody's downgraded several city bond ratings and Standard put the city on a watch list, though the city's ratings remain high.

Also, Glendale pledged to cover the Coyotes bonds with sales taxes, a revenue stream hurt during the recession. The city in its preliminary bond statement points out its sales-tax base is strong.

OK, lets check the reporter's decision-making here.  We have five facts

• The major bond ratings agencies recently put the city on a credit watch list
• Sales tax revenues that pay for the bonds are way down
• The city is investing $200 million in a $116 million dollar asset without getting any equity
• The city has a history of failed bond issues, as evidenced by the previous $180 bond issue they are trying to bail out with this one
• A local think tank has raised legal questions about the deal -- legal questions that turned out to be correct in a parallel case.

So our lede is that it is all about the fifth one, just because millionaire Matthew Hulsizer, who is set to feed at the public trough to the tune of $200 million, says its so?

Ask yourself, what is the first section of the paper many folks look at?  The sports page?  An extra professional sports team adds a hard to quantify but definite amount to the paper's bottom line.  The AZ Republic clearly recognizes this and is all-in for any taxpayer subsidy that is required to keep this important part of their business running.

This is a great post, with a lot of terrific video links, on one man's list of the worst sports endings ever.  (via Tom Kirkendal).  It is very long, but my favorite was probably #10.  And of course all of us of a certain age probably remember watching #1 live.

My 16-year-old son is ranked 28th in the country in the ESPN fantasy football power rankings for 10-team leagues.  Wish he spent as much time on his calculus homework.

One of the perils of being a small school is that sports requires a lot of travel.   In Arizona (unlike Texas where I grew up) the private schools do not have their own prep league for athletics, but play with the public schools based on their size (e.g. 1A to 5A).  Ours is a 1A school that generally plays 2A because we get more teams to play that way.  In soccer we play 3A, which can be a tough road when a school that has barely 120 boys in the high school play schools with 900+ kids.  But we made it to the state finals last year, so we hold our own.

Anyway, last week we actually played a school within the boundaries of Grand Canyon National Park, just a stones throw from the south rim visitors center and the El Tovar lodge.   That was awesome - nothing like post-game parent cocktails on a deck looking at the sunset over the rim of the canyon.  (I am on the road but will post a few photos next week).

The Grand Canyon is spectacular, but there is something about looking down into it that reduces its beauty.  You only really see its real drama hiking down into it (e.g. the Bright Angel or the harder but more beautiful Kaibab trail from the South Rim).  If you want to talk about really spectacular scenery, I think Sedona beats the Grand Canyon, at least from the rim.

This week my son's team played a small school in Sedona, a pretty old boarding school called Verde Valley HS.  Its got an IB program and a lot of horses and a drop-dead location, and has been getting some popularity in this area and in SoCal.  Anyway, I have seen some nice kids fields, but this one was pretty spectacular.  Unfortunately I only had my crappy cell phone camera but here is a sample:

I hate blog posts that begin this way, but I will do it anyway:  Imagine that Wal-mart, Target and a hundred other major retailers all got together and agreed to an industry plan to hold down workers's wages.  Anyone involved with even rudimentary economics training would know that there would be enormous incentives for individual retailers to "cheat", ie offer wages above the agreed to levels to try to get a particular advantage hiring the best employees.  So imagine that the cartel actually forms an enforcement body, that goes around the country levying fines and punishments against any individual participant who breaks ranks and tries to share some of the largess with their workers.

Now imagine the NY Times rooting the enforcement body on, cheering it when it adopts a new get-tough stance on organizations that pay its workers too much.  Hard to imagine, but that is exactly the case in this article, where the Times writes about the NCAA's new efforts to get tough on what it calls "recruiting violations" but in any other industry would be called "trying to pay the workers more than the cartel allows."

NCAA division I sports are made up of a 100+ mostly public institutions that make a fortune off of their athletic programs, particularly men's football and basketball.  Large institutions like the University of Texas or Ohio State reap tens of millions each year in ticket sales, TV deals, merchandising sales, and Bowl/tournament winnings.  One of the reasons this is so profitable is that they basically pay the key workers who generate this income close to zero.  Sure, they give them a scholarship, but what is the marginal cost to, say, the University of Texas for providing a few hundred free educations on top of their 40,000 paid customers?  This is roughly equivalent to McDonald's paying its employees nothing more than a couple of happy meals each day.

While many of these university's athletes will make nothing after college playing sports, the ones involved in these "violations" are typically athletes who are offered millions, even tens of millions of dollars the moment they leave college.  In effect, these colleges are getting tens of millions of dollars of labor virtually for free, and so the incentives to cheat on their cartel deal are huge, which is why the cartel enforcers have to be so aggressive in stopping under-the-table payments to the grossly underpaid workers.

It is an ugly process, and one wonders why so many folks support it when they would be appalled at such practices in any other industry.

Unless you are from Mars, you probably know LeBron James is a free agent, being courted by a number of teams, ultimately deciding on Miami over his home town and former team in Cleveland.

This has been an odd auction for his services, because except for some tax issues (which certainly may have been a factor in going to Florida), price controls in the league effectively cap how much James can be paid.  And given his talent, it was clear that every team would be willing to pay him the max.  This has led to offers based mostly on non-monetary factors, with Cleveland mainly taking the Glenn Close approach from Fatal Attraction, basically saying it would have to commit suicide if LeBron breaks up with the city.

Many have commented on how much Cleveland, economically, had riding on James and that it may well get the biggest economic benefit, bigger certainly than Miami which has fairly indifferent and easily distracted fans, of any of the teams in the auction.  But with price controls, Cleveland lost because it was not able to bid for LeBron's services what he was really worth  (in fact, it was pretty clear that all the teams involved expected to have a huge consumer surplus from LeBron's acquisition, since his value to any team seems to be higher than the salary cap).

By the way, speaking of surplus or lack thereof, my belief is that New York has continued its tradition of offering long-term lucrative deals to disappointing players.  Having watched Amare Stoudemire for seven years, I can say that he is fully poised to be the next Stephon Marbery for the Knicks.  He can be brilliant, and he is very talented, but he has focus issues that are not going to be enhanced in New York and at times was thrown off-kilter by the media pressure in Phoenix where the press is a cupcake compared to New York.  He is not even much of an upgrade from David Lee, but he gets paid a lot more guaranteed money.

I thought this French socialist reaction to France's World Cup humiliation, which included the team going on strike and refusing to practice just 48 hours before their make-or-break final match, was funny:

Some opposition politicians said the players' behavior represented the selfishness fostered by the governance of President Nicolas Sarkozy, who had been called President Bling Bling for his flashy style.

"It's all about individualism, egotism, everyone for themselves, and the only way to judge human success is the check you get at the end of the month," Jérôme Cahuzac, a Socialist Party member of France's National Assembly, said in a radio interview, according to Reuters.

Certainly no French socialist ever went on strike when other people in France were counting on them.  I kindof thought the team sucked, but in total unison and solidarity.

From the Sun

John Isner and Nicolas Mahut had been battling on court for almost TEN HOURS when the umpire eventually called time on the titanic struggle.

The first-round Wimbledon encounter - already held over from Tuesday night - will now go into a third day with the incredible scoreline 6-4 3-6 6-7 (7/9) 7-6 (7/3) 59-59.

Records tumbled as both players held their serve for an incredible 118 games in the decider before the enveloping gloom over SW19 brought a halt to proceedings.

I joke about my son being a Yankees homer, but he has some work to do before he can reach this level of sports passion.  Awesome rant.

My son has decided to stay focused on ranking, lists, and sports.  Thus he has renamed his blog.  So far his score is

Total Blog Posts:  3

Blog Names: 2

I have been encouraging my son to take up blogging on... well, anything.   I hope it will be a way for him to practice his writing, learn a few computer skills, and exercise some critical thinking.   So he has finally gotten started, and of course the teenage male mind turns to ... ranking baseball players.  Check his post out, and be sure to give him grief in the comments for being a Yankee homer.

Todd Ramsey has won our annual bracket contest - actually, he had it locked up last week statistically, but I did not want to discourage everyone.  Yours truly had his worst finish every, coming in *cough* mumble mumble, but importantly placed ahead of my son Nic, which is all that matters around our household.  The full rankings can be found here.

I thought the finals were great, and I am sure Butler fans will be replaying that last shot in their heads for years, in the same way I can still see Alonzo Mourning or this backdoor cut in my sleep.